- Mastercard might be making crypto payments as easy as fiat payments with a new system later this year
- The system would see merchants able to accept native crypto without the need for conversion first
- This huge development relies on participation from retailers, which could be the stumbling block
The news yesterday that Mastercard might be allowing merchants to accept cryptocurrency was understandably big, but having been primed by the PayPal and Tesla revelations in recent weeks, it went somewhat under the radar. However, at its heart is a concept so huge that, were it to launch in the manner suggested, it has the potential to revolutionize acceptance of cryptocurrencies more than any other development so far. As great as this sounds, the success of Mastercard’s potential venture relies on something that can in no way be guaranteed – participation.
Crypto Payment, No Conversion
First, a quick recap. On Wednesday, Coindesk cited an inside source as saying that payments giant Mastercard was planning on allowing retailers to opt into a scheme where they could accept cryptocurrencies in the same way that they accept fiat currencies. Given the nature of the revelation there are few details at present, but if what we know bears fruit then Mastercard could be on the verge of truly sending cryptocurrencies mainstream after years of attempts from crypto debit card makers.
Yes, PayPal merchants being able to accept crypto payments on their platform was a huge step, but it’s no match for paying for your groceries or the ubiquitous coffee shop purchase in crypto as easily as with fiat currencies. The Mastercard platform will allow that because users won’t have to go through the arduous process of transferring the right amount of crypto into fiat currency before buying the items first, something that is currently the norm for almost every crypto debit card.
This fact alone removes a huge barrier of inconvenience – as we and plenty of others have said many times in the past, cryptocurrency usage won’t be commonplace until it is as easy to use as fiat. And Mastercard is making that happen.
What’s The Catch?
While this all sounds well and good, the Mastercard venture relies on one key thing – participation. Although it isn’t clear exactly how they’re going to manage a rollout, express permission will be needed from the retailer before they can accept cryptocurrencies. Mastercard can’t simply roll out an update for payment terminals (which are of course made by hundreds of different manufacturers) enabling them all to accept crypto – it has to be done on a case by case basis, at least initially.
Immediately then you’re facing an ideological problem – what if the retailer doesn’t like the concept of cryptocurrencies? There will be millions of retailers out there, from street corner shops to Walmart, that might not like the idea of accepting cryptocurrencies, for any number of reasons. And who’s to say that the process would be free of charge? If Mastercard charges merchants for conversion or they have to buy a new terminal, are they likely to do that knowing that crypto purchasers will make up a tiny fraction of their customer base? No, they’re not.
We also don’t yet know what will happen to the unconverted cryptocurrency once it arrives with the retailer. Most will want to sell immediately, which could incur a fee. Again, are they likely to want to pay for this inconvenience?
Buck Stops With Mastercard
Mastercard has the potential to bring cryptocurrencies into the mainstream to a level we have not yet seen, finally streamlining the process to the point where it is a genuine competitor to fiat transactions. We genuinely could see a day when we can turn our staking rewards into grocery money without seven transactions and fifty dollars in ETH gas fees along the way.
However, Mastercard needs to make the prospect attractive enough for merchants in order for them to take the risk. Failure on this front could sink the whole venture before it begins.